MGL Chapters 64H and 64I impose sales or use tax on tangible personal property sold or consumed in Massachusetts in the construction, reconstruction, alteration, remodeling or repair of real property. Contractors who purchase tangible personal property from Massachusetts vendors are considered the consumers of that property (it is not a purchase for resale) and are expected to pay the sales tax when making the purchase, but tangible personal property used in these contracts is often brought into Massachusetts from other states.

MGL c.64H§30A and c.64I§31A require nonresident contractors to either furnish the commissioner with a guarantee bond or deposit a sum equivalent to 6.25% of the total amount of their contract to secure payment of the tax due. This provision applies whenever the contractor will use or consume tangible personal property within the commonwealth in carrying out the contract for completion of a taxable job.

When a nonresident contractor complies with this provision, the commissioner issues a Certificate as evidence of compliance with the bonding requirement. Principles / General contractors doing business with a nonresident subcontractor must obtain a copy of this certificate from the subcontractor or must satisfy the bonding requirement themselves on behalf of the subcontractor and will be personally liable for payment of the sales and use tax on tangible personal property used or consumed in carrying out the contract.
 

Bond Instructions

  1. Section 1 of the Bond form pdf format of Bond Form
must be filled out accurately and completely.
  2. Bond must be completed by bonding company and have valid signatures and seal.
  3. Bonding Company must also include a power of attorney designating the bonding company as an agent for all matters pertaining to the job in Massachusetts
  4. The bond must have a value of six and one quarter percent of the total contract price.
  5. The Bond must be modified during the project if the price of the contract increases.
  6. The Bond must remain in effect from the start date of the contract to six months after the due date of the last sales/use tax return that needs to be filed for the contract and the bond must remain in effect for at least 6 months after the completion date of the contract.
  7. The Bond form must be sent to the department along with the completed registration form to avoid delays in processing and issuing of the certification.